Sweetheart Deal

THE DEADLINE for completion of a new farm bill has been pushed back to May 16. But the endless wrangling over a piece of legislation that Congress once hoped to finish in 2007 has not induced a significant change in the thinking of those who regard it as an opportunity to lock in lush new benefits for American agricultural producers. President Bush has reportedly relaxed his position on means-testing for farm subsidies, offering to permit individuals earning up to $500,000 to continue receiving direct payments. Yet farm-state lawmakers are holding out for a level nearly twice that.

Among the least defensible provisions under discussion is a plan by those lawmakers to prop up U.S. sugar cane and sugar beet farmers. The background to this is long-standing federal protection for sugar, which takes the form not of direct subsidy payments but of interlocking price supports and import quotas. For decades, U.S. sugar policy has hurt sugar farmers and cane-cutters in poor countries and raised prices of candy and soda for U.S. consumers (admittedly not altogether a bad thing, given the obesity epidemic). It has also driven some U.S. candy producers either out of business or overseas.

The 2005 Dominican Republic-Central America Free Trade Agreement (DR-CAFTA), as well as newly effective provisions of the North American Free Trade Agreement, threatened to upset this cozy arrangement by opening a sliver of the U.S. market to sugar from Mexico and the DR-CAFTA countries. A sugar-lobby effort to restore the old status quo failed earlier this year, so the lobby and its Capitol Hill supporters have come up with an ingenious new way to protect the industry: raising the support price for U.S. sugar, already above the world price, for the first time in 23 years, while requiring the federal government to set aside a certain quantity of imported sugar for conversion to ethanol. Never mind the untested economics of sugar-based ethanol production in the United States. The Sweetener Users Association, an organization of sugar-using industries, estimates that the farm bill will add $2 billion to grocery bills over five years. Commodity prices and farm incomes are exploding, imposing higher food costs on American consumers and threatening poor people around the world with outright hunger. Perhaps only in the U.S. Congress could it seem like a good time to compound the problem with a dose of sugar shock.